I recently read an article in a major Toronto Newspaper with some advice for Buyers:
1) Don't place an offer on a property if there are five offers or more.
2) Don't Trust a Seller's Home Inspection Report.
While I can understand why the author feels this way the message raises the hair on my back (OK...I don't have hair on my back but you know what I mean) due to the blatant disregard for current market conditions and for the professionals who work in this business.
Let's deal with the first point first:
"The Five Bidder Rule"
The philosophy behind this rule is that you should consider backing out of the offer process if there are more than five offers on a home.
As a Buyer I think I could easily read this rule and think "that makes total sense". But here is the problem:
1) If you are looking for a freehold property in Central Toronto (that is not falling apart) you may as well give up your search now because the "five bidder rule" basically constitutes instructions to spend all your spare time driving around and looking at properties while making sure you only place offers on properties no one else in their right mind would want...when you find that one...go for it!.
Almost anything reasonably priced and in good shape nowadays will have five bidders.
I know you might be thinking..."well...he is a Realtor...of course he wants me to go for it".
Be honest...that thought crossed your mind...right?
Please think about this for a minute.
In a bidding war where there are 5 other offers there is only 1/5 of a chance that you will actually get it (well..I like to think the odds are higher if I'm your Realtor) :-) . So here is the reality...the odds are very good that I am going to spend a lot of my time going through a process that doesn't end favourably. It is not fun.
I don't do this because I relish it...I do it because sooner or later I will win and I will get to see that big smile on your face.
The only thing I know for sure is that if we don't try you won't get it.
2) The author's viewpoint implies that Realtors will get you to pay an irrational price for a property if it means the Realtor "wins".
I can't speak for all Realtors out there but I know that many of us...myself included...consider it part of our job to ensure you don't pay too much. I want you as my client for life and not for a deal.
To be honest I don't just want you as a client for life. I want everyone you know as my client for life.
If I don't try to stop you from overpaying for something then guess what my chances of accomplishing that are? Yes that is right...zero.
What if I do stop you from overpaying? Well you may be disappointed in the short term but in the long term you will thank me.
So please Mr. Author....show us some respect. Good Realtors are working for their clients and not for the commission...that is how any good business is grown.
Now for the second piece of Wisdom:
"DON'T TRUST A HOME INSPECTION FROM A SELLER"
Once again the author suggests that one should never trust a Home Inspector to do their job. One might as well say no Home Inspectors are ethical and professional. He further goes on to say you won't be able to sue because there are clauses preventing this in a Seller's Home Inspection.
This is the Reality:
1) Home Inspector's will have clauses in their contract that prevent you from suing them even if, as a Buyer, you order it yourself. This isn't because they are trying to dupe you, but because they are human. A Home Inspection is about 3 hours in duration and they can't possible catch everything...they also can't see what has been covered up...so if you think getting your own Home Inspection done will allow you to sue easily...think again.
2) The author suggests that you should interview Home Inspectors first to get an idea of what they look for when they inspect a home. The problem is the good ones are out working and not giving interviews. My concern would be that any Home Inspector sitting around speaking with you and not out working is not the Home Inspector you want. I suggest you listen to your Realtors suggestions as to who to hire and then do a bit of Google Research...if people aren't happy with this Home Inspection Company you will find out pretty fast. Look for established Home Inspection Companies like Carson Dunlop or The Castle Group and you will be good to go.
3) Remember we talked about the 5 person or more bidding war above? This is pretty much the norm for freehold properties in Toronto in the current market. The author is suggesting that for virtually every freehold property out there that is For Sale, each individual Buyer should pay $500+ for a Home Inspection.
This will be money down the drain for every Buyer except the winning bid. So instead of one Seller paying $500+, every Buyer on every resale property should pay $500+. It sounds like a multi-million dollar waste of time to me.
My belief is that Seller Home Inspections should be a mandatory requirement to stop the insane waste of money that most Buyers encounter.
A Seller Home Inspection doesn't prevent you from doing your own...but it gives you the choice.
So my advice: Research the company who did the Seller's Home Inspection on-line...if they are reputable you likely don't need to worry. Most Inspectors will even take you on a walk through of the Home Inspection they performed for around $200.
1) Trust your Realtor but do some of your own homework.
2) Don't throw unnecessary money out the window.
3) The only way you can be sure you don't get the house you want is if you don't even try.
4) If you don't already have a Realtor give me a call at 416 825-1803 or visit my website at:
HOW MUCH WILL IT COST TO PURCHASE A RESALE PROPERTY IN TORONTO?
Updated: April 24, 2017
There is one thing I can promise you...this blog will be boring. There is nothing exciting about discussing closing costs when purchasing a piece of Real Estate in Toronto...but it is critical that Buyers do not get hit with surprises so here is a run down of the most significant costs:
LAND TRANSFER TAX (There are two of them!):
Thanks to the City of Toronto we currently have two Land Transfer taxes in place. A Provincial Tax and a City Tax. They are not insignificant so it is really important that you factor these costs in:
PLEASE NOTE THAT THE CITY OF TORONTO HAS APPROVED CHANGES TO THE TORONTO LAND TRANSFER TAX, WHICH TOOK EFFECT FOR TRANSACTIONS CLOSING ON OR AFTER MARCH 1, 2017, TO HARMONIZE TORONTO LTT RATES WITH THE PROVINCIAL LAND TRANSFER TAX. AS SUCH, THE TORONTO LAND TRANSFER TAX IS NOW EQUAL TO THE PROVINCIAL LAND TRANSFER.
For example, the Land Transfer Tax on a $500,000 property in Toronto would be as follows:
Provincial Land Transfer Tax: $6475
Toronto Land Transfer Tax: $6,475
Total Land Transfer Tax: $12,950
LAND TRANSFER TAX REBATE:
If you are a first time home Buyer (meaning this is the first time you are buying a property anywhere in the world), you likely qualify for a Provincial Land Transfer Tax rebate and a Toronto Land Transfer Tax rebate (equivalent to the land transfer tax payable on a $400,000 property).
Beginning January 1, 2017, the maximum amount of the refund is $4,000. The increased limit of $4,000 applies only to conveyances or dispositions that occur on or after January 1, 2017, regardless of the date the agreement of purchase and sale was signed.
Beginning January 1, 2017, no land transfer tax would be payable by qualifying first‑time purchasers on the first $368,000 of the value of the consideration for eligible homes. First‑time purchasers of homes greater than $368,000 would receive a maximum refund of $4,000.
Toronto Land Transfer Tax Rebate:
Effective March 1, 2017, the maximum rebate for eligible first-time purchasers will increase from $3,725 to $4,475 under the new structure such that the first $400,000 consideration value is not subject to the tax. The City has also amended the first-time homebuyer rebate program eligibility rules to make them consistent with the current Ontario Land Transfer Tax (LTT) rules by restricting rebate eligibility to Canadian citizens or permanent residents of Canada.
I would budget about $2,000 for Lawyer costs on a Purchase but costs can vary so it is always best to check with your Lawyer. Keep in mind some lawyers say they charge a lot less but charge you for every single item of work/copying etc. in the process.
Closing Adjustments are sometimes difficult to understand as they are not really "costs" of the transaction and shouldn't be factored into any investment analysis scenarios you may be doing. Nonetheless you need to have cash available for them.
These adjustments are primarily reimbursements to the Sellers for things they have may have prepaid for you.
If, for example, you buy a condo with Monthly Maintenance Fees of $400 and you close the deal at the middle of the month, you will have to reimburse the seller for about $200 of the maintenance fees he/she already paid for the month in question as that second half of the month iss really your responsibility.
If the Seller has already paid the property taxes to the city for the next few months, you will have to reimburse him for any portion that is now actually your responsibiliyy.
So these type of costs are reimbursements for things the seller has prepaid. Clear as mud? If not...just ask me and I will explain further.
I would budget about $2,000 for this a general guideline but it can vary based on things such as the value of the property.
The Seller is going to want to see a deposit of about 5% of the Purchase Price by bank draft or certified cheque no later than the first day after acceptance of the offer so you need to have this amount immediately available. If you intend to put more money down on the property, the balance of funds would be due just before the deal actually closes.
Note: If you are not a resident of Canada you will likely require a 35% down payment at closing. To discuss your specific financing scenario I would suggest contacting Jennifer Hinds or Steve Bourne.
Other things to consider include getting insurance on the property (which is required), Moving Expenses, and Mortgage Insurance Costs. These can vary greatly by individual and must be reviewed on a case-by-case basis.
THE COST OF WORKING WITH ME TO BUY A PROPERTY IN TORONTO:
There are rare exceptions where the Purchaser may be liable for paying a Buyer Agent commission but they are rare, and you will always know if this situation exists BEFORE placing an offer on a property. Although these scenarios do exist, in my ten year in the business I have yet to actually encounter one.
Ok...I warned you...this was a boring blog...but sometime the boring ones are the most important ones.
Since working with me is free...why not give me a call?
Evaluating the current market can be difficult...even for a Realtor.
We see all of the news reports you see and we cannot ignore this information because it is often based on solid facts...but the information is frequently skewed or outdated.
To predict the Real Estate Market in Toronto solely based on Canada wide, or even Ontario wide statistics is preposterous at best...and yet mainstream media continually does it.
We cannot ignore the bigger picture but we are a unique market.
One also needs to recognize that making a buying or selling decision based on "Toronto Specific" Real Estate statistics can also be problematic as the market changes quickly and the fact that they even exist tells us they are already outdated.
So who knows best what is happening RIGHT NOW?
I am guessing as you read through this you are anticipating that I am going to say the obvious thing...which is...of course...your Realtor.
I wish I could definitively say this is always true, but I think you really need to be careful when speaking with a Realtor.
As an individual we are susceptible to skewed perceptions of things just as much as anyone else.
I can tell you that I have been so busy I thought the market was going insane, only to realize when the final statistical information came through, that I was simply very lucky and I just happened to be busy when other Realtors were struggling. Truth be told the reverse happens as well...there have indeed been times where things were exceptionally quiet for me and I was shocked to find out that other Realtors were busy.
The point is that as individual Realtors our business does not always flow with the tide so one needs to be careful even when listening to a Realtors view of the market.
From my perspective the best approach is this:
1) If you are considering buying a property in Toronto and are reading information about the future of the "Canadian" Real Estate Market or "Ontario" Real Estate Market - you can largely ignore it - it only matters if there is some really HUGE overwhelming economic CHANGE on the horizon. I have capitalized the word "change" in the last sentence because one needs to understand that more of the same...even if it is not good...is not a change.
2) If you are reading statistical information about the Toronto Real Estate Market recognize that the information is at least a month old and verify current conditions with a Realtor.
3) If you are speaking with a Realtor about current market conditions in Toronto, make sure their response is not based solely on what they are experiencing in their business...and that they have spoken to other Realtors to find out if they, as an individual, are flowing with or against the general "tide".
There is no perfect answer...but in my humble opinion...this is the best way to go.
It is time for us to get real here and talk about the realities of Real Estate.
Everybody wants a Realtor who will sell their home...sounds logical right? The truth is it rarely happens.
To begin with, when a significant number of Buyers are viewing a home the Listing Agent isn't even present...nor does the Buyer or the Buyer's Agent want them to be present.
How can I sell your home if I am not even there?
Another reality is that we are tallking about a major chunk of change and as a result, no amount of convincing is going to get a Buyer to buy something they don't like...it just won't happen. We are not selling a new flavour of Potato Chips...we are asking someone to commit hundreds of thousands of dollars. Trust me...if they don't like it...I am unlikley to be able to sell it to them...and if I do succeed in this regard they will almost certainly come to their senses while the deal is in its conditional period and back out of the deal.
So I think if you are looking for a Realtor who will "sell your home" you are heading down the wrong path.
What you do want is a savvy Realtor who understands technology and knows how to effectively set you up for success. Someone who will make suggestions to ensure the home shows properly, someone who will get a Home Inspection done on a house, or a Status Certificate ordered on a Condo BEFORE going to market to help minimize or eliminate a conditional period, and someone who knows how to market, market, market, in order to get serious buyers in the door.
Just as an aside, I pay for my client's Home Inspection or Status Certificate...this is often a "client expense".
If things are set up and marketed properly you don't need someone to "sell your house", because you have someone who gets people in the door so the house can sell itself.
You need a strong on-line and social media presence, you need Open Houses (these aren't always permitted in Condos) and you need traditional methods of marketing such as flyers throughout the neighbourhood.
I know how to get properties sold but I do have to warn you that although I will work with you to make the process as smooth as possible, I consider it my job to make your life hell the first week a property is on the market. If I have my way it will be very hard for you to come home that first week because someone is always "showing the property". It can be the difference between getting $10,000 below or $10,000 above list price and with a potential $20,000 differential (or more) my clients are usually fine with the inconvenience.
So...if you want me to sell your home...don't hire me...if you want me to get your home sold...I'm your man.
Let’s face it. Life is complicated…and it is full of choices. We may not even realize how many choices we have on a daily basis because we are so busy focusing on get specific tasks accomplished.
Searching for a property is no different. The choices are endless. What area do I want to live in? What area can I afford to live in? How much am I willing to compromise? Do I get a Variable Rate or Fixed Term Mortgage? Do I Sell first or Buy first?
The thing is…most of us want it all. We want everything…and this doesn’t simply apply to Real Estate.
So what is everything?
I have been working with people in Toronto for years and the answers are endless but the overall picture is not. It boils down to the following:
i) A place I can call my own.
iv) The means to socialize and vacation with friends and family.
When we reduce it down to such a simple level it is easier to take in. What we really want is to live what I call a 360º degree lifestyle, and that means finding balance in all areas.
When I go out with my clients I give them a pen that says “Live 360º” on it because I want them to know that I “get” that the property is only one component of their lives.
We need to ensure we don’t end up house poor, but live within our means. If we can do that we have not only accomplished the first step above. We have taken major strides toward the next three.
Stricter lending rules make sense to me. There is no benefit to anyone if people buy places they cannot financially handle. Life is meant to be enjoyed. It is not meant to be spent worrying about how the next Mortgage payment is going to be made. So reducing the maximum amortization period to 25 years...I get that. I may not like it as a Realtor...but I get it.
A special Land Transfer Tax for Toronto only,however, makes no sense. What happened to Mayor Rob Ford's election promise to eliminate this? Can you imagine trying to sell your property on the south side of Yonge and Steeles when a Buyer saves thousands of dollars in tax by simply crossing the street and buying on the other side? Both Residential Buyers and Investors are less inclided to buy here because of this tax. Mr. Ford should be held to his promise and this tax should be eliminated.
Then we have the elimination of High Ratio Mortgage Insurance for properties over One Million dollars. On the surface it sounds good right? If you can afford a one million dollar home you don't need high ratio insurance. The problem is that in Toronto, Freehold Properties in this price range are starting to become pretty common and we have a lot of young professional couples who can afford the Mortgage (they are paying that much in rent anyway) but not the down payment now required. They are stuck. As their families grow they can no longer live in a Toronto Condo (three bedroom Condos are rare) and as a result they have to move out of the city.
I don't like it...but the market is declining on a "number of transactions" basis and price increases are moderating. The end result was best expressed by our Finance Minister who said: "What I am seeing now in the most recent data is quite clear evidence that there is no boom".
So if nothing else...can we stop talking about a boom and a market collapse? I don't see it in the cards.
Slight adjustment...maybe...collapse...really? We have been talking about it for over ten years...it's time to put it to bed for a while.
Do you ever get a song in your head and simply can't get it out?
Ever since the Opening Ceremonies of the Olympics that "I Believe" song has been running through my head.
Unlike most times this happens, however, I am actually enjoying the fact that the song won't go away.
It is the words the "I beleive in the power of You and I" that runs through my head most often. I guess it is because that is exactly how I feel about most things in life.
Yes, it is possible to "go it alone", but one can be far more effective as a team.
My work in Real Estate is no different. I don't view my work as a "solo" event and I do not view my Realtor role as singularly "finding a property for my client" or "selling my clients house".
I know I know...pretty bold words for a Realtor to put on their blog...and perhaps not the wisest ones.
The thing is though, Buying or Selling is so much more effective, and so much more fun, when the Realtor and client work together as one unit. We both want to acheive the same goal and when we work together to accomplish it rather establishing strict "Realtor/Client" lines we can get that prize we both want so bad. It will be O\our own version of the olymopic medal.
Staging a property has become so popular lately that I wanted to take a few minutes to share my thoughts with regard to it.
First and foremost I want to emphasize that although this Blog may make me appear to be opposed to it, I am most defintely not. I just think it has its place and we are getting caught up in a bit of a marketing phenomenon cultivated by the many television shows focused on how to sell a property.
To be fair to individuals running Staging businesses, one Stager I respect immensely emphasized to me that Staging is actually a three part process, but most people really only think of it as the final stage.
The first stage is "Analysis and Planning". This involves understanding the composition and features of your home and compiling a llst of work items required to prepare your home for sale.
The second stage is "Physical Work"...painting, fixing or replacing elements in the space, cleaning, decluttering, and preparing the structural place for presentation.
The final stage...the one we tend to think of as "Staging" involves "Showcasing the Property" for final presentation.
Here is the thing: In my opinion, I think that between a Realtor's knowledge, a Seller's Knowledge, and a Home Inspection Report (which I usually suggest getting prior to listing a residential freehold property for sale), it is often possible for the first two stages to be covered off.
The final stage is important...your home MUST be showcased effectively. Sometimes this requires a Stager and I will be the first person to tell you that if I think it is the case.
Television shows, however, seem to have convinced people that their own common sense isn't good enough.
I have sold a lot of properties and I am here to tell you that most people...not all people...but most people...already know what to do:
1) Repair damage (and I mean repair damage properly...you do not want an artifical cover up unless you enjoy legal issues after the fact).
2) Paint where and if necessary.
3) Declutter your home, arrange furniture so that the home is presented in a manner that would be appealing to the largest number of buyers (i.e. the pool table in the dining room may be totally cool for your personal day to day use...but not for selling purposes).
4) Remove as many family pictures etc. as possible so that the property can be viewed by a buyer as "theirs" and not "yours".
That is it. That is pretty much all you need to do, barring glaring issues in a Home Inspection Report.
The thing is...I am betting you already knew that.
Why is it then, that so many people feel the need to pay a Stager to tell them what they already know?
Staging has its place...and it may be necessary for you...but it also may not be necessary.
If you are not already working with a Realtor I would be happy to assist you with arriving at the right decision in this regard.
Ok I will admit it...this blog seemed like a great idea when I set it up...and it is a great idea....so I will do my best to post more often...but making sure my clients are getting the best possible service I can give them will always trump taking the time to write a Real Estate Blog.
Sometimes, however, there are imprortant things that need to be communicated and a blog can be a great vehicle for relayng inforrmation.
I will do my best to make the time to post on my blog whenever I feel there is something you really need to know.
Today is one of those days. We are approaching a two week period where buyers will likely have a brief period of time where there are multiple property options...but you need to be ahead of the game.
Pretty much every year it happens like clockwork. The first weekend in April occurs, and then the Monday following it a HUGE influx of properties come on the market. The market is busy so the good ones still do not last long.
Buyers need to be careful they don't get caught up in the frenzy and just buy a property for the sake of buying, but they also need to vigilantly watch what is coming on the market. If something they like comes on the market there is no time for the: "I like the look of this one...can we see it next week" scenario. They need to make the time to see it, and make the time to see it fast. If it is as nice as they think it is...it isn't going to be there next week. There is no time for complacency in the first two weeks of April.
One way to ensure you are ahead of the game is to define your searchable criteria and get yourself set up on automated emails.
Once your criteria is recorded, you will receive one email by about 6:00AM in the morning each day notifying you of any new listings that went on the market the day prior, and of of any existing listings that were amended in some way (i.e. if a price change occurs you will know). This means that if a Realtor puts a property up for sale at 11PM on a Monday night you should know about it by 6:00AM Tuesday morning.
It can take a couple of days for properties to show up on the public MLS sysem "realtor.ca" so by having the automated emails set up you will be ahead of the game and can likely get out to view the property before the vast majority of people even know it is on the market.
I can easily set the automated emails up for you. All I need to know is criteria such as price range, area, type of property (condo, house etc.), minimum number of bedrooms and bathrooms, and if parking is an ABSOLUTE requirement.
Each day you will recieve one email with a link to properties matching your criteria...and you can easily cancel the automated emails at any time.
I am afraid I can only offer this service to individuals who are not currently working with another realtor as it is a violation of our real estate board rules for me to be communicating with another realtor's clients.
If I can assist you with this please don't hesitate to ask.
I am really hesitant to write this last paragraph because it can make me sound but "uppity" (which I am far from) but I also don't like getting some peoples hopes up and then having to let them down. A one bedroom condo in Central Toronto (my area of expertise) tends to start at about $300,000 and go up from there. Occassionally it might be possible to find something in the $275K - $300K range but in my opinion, anything that is a decent size in Central Toronto and is under this price range tends to be in a building that has issues...whether it be financial or otherwise....so I am afraid I don't work with clients looking for properties under $275,000. I just don't feel I can provide a service to them that I would be comfortable with. I want my clients to be in properties that they will ultimatley be happy in. It isn't the initial deal that counts...it is the client experience that comes from that initial deal...this is what breeds repeat business and referrals.
Buyers have had a tough go of it for the past year or so but it is finally their opportunity to get a bargain.
The number of sales has rapidly declined (see the MarketWatch Report from the Toronto Real Estate Board for the most recently available statistics) and from what I am seeing Buyers are sitting on the fence waiting to see what happens. The end result is slow moving properties.
While I totally understand the feeling that one should "wait", I think it is a dangerous strategy. One only has to look back at the market decline at the end of 2008 to see how incredibly short lived it can be and how incredibly rapidly it can rebound.
I think most people waited at the end of 2008 and most people lost out.
Some of the best investors of our time, Warren Buffett and Sir John Templeton have both indicated that trying to time things perfectly is a strategy that usually fails. You are better to buy just before the "bottom" and know you got a deal rather than waiting to reach the bottom and missing it completely.
Real Estate Statistics are usually released after about a one month lag (sometimes three months if you are looking at quarterly reports for all of Canada). This means that by the time you read that prices are "starting to rise" you are probably too late. They will have already risen substantially in the real world.
So the bottom line is...buy now.
I know this sounds like a line from a Real Estate Agent, but I truly believe it is the wise thing to do.